A recent report revealed that SM Entertainment (hereinafter referred to as SM) was found to have influenced public perception on online community boards and internet cafes during their management dispute with HYBE early last year.
It has recently been uncovered that an entertainment company has engaged in directing and financing the manipulation of public opinion in order to portray their opponent in a negative light during a dispute. This revelation emerged following the arrest of Kakao founder Kim Beom-soo on the 23rd for manipulating stock prices in order to prevent HYBE’s acquisition of SM. It has been revealed that there was also deliberate interference in public opinion, in addition to the manipulation of stock prices.
External Firm Contracted for 1.38 Billion KRW (Around 1 Million USD)
TenAsia obtained exclusive Telegram chat logs on the 23rd, which revealed that on February 27, 2022, the PR agency “Astrafe”formed a chat room called “St”that consisted of both employees from the viral firm they hired and executives from SM.
This was a task-force style organization created to sway public opinion in favor of SM during the SM-HYBE management dispute that began earlier that month. Their goal was to promote positive information about SM (viral) and disseminate negative news about their rival (reverse viral). The team was comprised of six individuals: two SM employees, the director of Astrafe, and three employees from the viral firm.
The agreement between SM and Astrafe was to carry out an advertising campaign on portal sites such as Naver to promote “SM 3.0”. The total cost of the contract was 1,388,140,000 KRW. SM 3.0 was implemented as a strategy to improve shareholder value and compete against HYBE. This plan aimed to address previous criticisms of SM for neglecting shareholder value and ultimately prevent HYBE’s takeover attempt by increasing stock prices.
Despite the fact that SM did not solely spend a large amount of money on promoting SM 3.0, Astrafe suggested that they also partake in a “media mix”operation. This operation encompasses more than just traditional advertising, but also includes viral marketing as part of a comprehensive service concept.
The conversation transcripts validate that, although the stated objective was to promote SM 3.0, the true purpose was more aligned with manipulating public opinion. This included disseminating content that portrayed SM in a positive light and HYBE in a negative light.
Intervention and Manipulation of Public Opinion in Communities and Cafes
Before the contract was signed, Astrafe had already been informed that their agreement with SM would primarily involve viral marketing. In-depth conversations with SM took place starting on March 1st, following the signing of the contract. During these discussions, an SM employee who oversees online promotion inquired, “We currently have an issue. Is it possible for us to swiftly implement viral marketing in various communities?”The other party also inquired about the issue and requested access to a shared spreadsheet to keep track of the progress of the posted content.
When the topic of sharing previous material was brought up, the online promotion manager (at the central office) of SM readily consented, stating, “It would be beneficial to disseminate it again.”Another SM employee then asked for a list of online communities where the material could be shared, indicating that they were compiling a report for higher authorities. This demonstrates that SM was not simply outsourcing the task, but actively directing the viral companies, who complied accordingly.
HYBE’s Controversial Decision to Disband Artists
If SM had solely published articles that portrayed them in a positive light, the amount of criticism directed towards them could have been reduced. However, SM went beyond that and actively disseminated negative viewpoints about HYBE.
SM provided a thorough explanation on how viral companies should approach their posts. They categorized the angles into three sections. The initial category focused on clarifying the SM-HYBE situation, highlighting concerns about HYBE’s acquisition potentially causing the disbandment of their artists.
Specifically, SM’s representatives would supply targeted material written in a “community style,”detailing the disappearance of groups such as GFRIEND, NU’EST, and PRISTIN following HYBE’s acquisition. Despite HYBE’s ability to make a tender offer, the stock market still favors SM’s current management, resulting in their decision not to sell to HYBE.
Contrary to rumors, PRISTIN did not disband after HYBE’s acquisition. The group actually disbanded in May 2019, while Pledis Entertainment was only acquired by Big Hit (HYBE) in May 2020.
SM responded to HYBE’s allegations regarding their multi-label system, refuting their claims and expressing concern about the possibility of SM artists being unable to voice their opinions and facing contract termination or disbandment if SM were to become a sub-label under HYBE.
The objective was also to bring attention to contract renewals, insinuating that artists would be disbanded if they decided to switch to a different agency. This narrative was intended to suggest that both present SM employees and HYBE supporters were opposed to the acquisition. In response to SM’s request, the employee at the viral firm promised to disseminate the provided content in fragments throughout multiple online platforms and forums.
When photographs of truck protests against HYBE surfaced in certain communities, an SM employee inquired about the possibility of sharing similar content on Theqoo, Instiz, and other online forums, indicating that SM was cognizant of these particular communities.
The chat records expose the fact that employees of the viral firm went to great lengths to avoid being caught. In one instance, an employee pointed out that a post from another firm was too obvious, leading Astrafe’s director Park to order it to be removed and revised.
The source can be found on Naver at the link: Naver
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